Are You As Successful As You Need to Be?

Rande Howell of TradersStateofMind.com points out how easy it is for novice traders to keep trading with a misguided understanding of trading success and how a complete rewiring of the trader mind may be necessary in order to finally begin trading like a true professional.

The Illusion of Hard Work

No one has the intention of sabotaging their success in trading, but, in practice, that is exactly what most traders are doing, day in and day out. Focused on (and blinded by) their notion of success, they never see what stops them from achieving the next level. When they do not get the results they want, they keep pushing even harder, believing that through sheer effort and willpower, they will eventually break though to their desired success. Despite their effort though, an invisible force field seems to block their roadmap to success. Have you ever felt this way?

Unknowingly blinded by their misguided understanding of success in trading, years of growth opportunity slip by the trader unnoticed like a thief in the night. Yet, it is hidden in plain sight for those with the eyes to see. And for those without the eyes to see, they keep banging their metaphoric head against a brick wall again, again, and again. At great cost, they remain blind to what they are blind to.

You have probably heard the old definition of crazy, it’s doing the same thing over and over again and failing, while still expecting things to turn out differently. “Everybody knows” (after all, it’s common knowledge, right?) you need to change if things are not working out. Yet, that is exactly what the vast majority of traders keep doing (in their own particular way). They work hard, but they have little to show for their efforts. So, crazy is better described as normal. Because that is what the majority of traders do.

It is normal for traders to resist personal change (the head game) until a looming crisis is unavoidable. That crisis is usually that their capital is running thin and they can no longer ignore the pressure to perform in the short -erm. This is normal. Recently, I was talking to a trader who helps manage a large trading room run by a very successful trader. Here is what she said:

“There are a ton of long time traders in here who know trading backwards and forwards, but we are not as profitable as we need to be to produce a sustainable living. Something is wrong, but we cannot figure it out. It’s not out of the lack of effort.”

So, do you want to be a normal trader? Well, the vignette above provides a snapshot of normal traders. They are all renting space in a professional trader’s trading room where his impressive numbers are shown for everybody to see—they definitely have one of the top traders as their coach—and they are working hard at learning his system. Day in and day out they are taught to do what he does, watching in real time what he does, but then they don't take the trades or don't manage the trades consistently, as he does. When the trader coach asks why, they say, “That one got away from me” or “I missed that one.” The truth, from the perspective of the master trader, is that they didn’t take it out of fear-based avoidance or they lost their emotional wits while managing the trade and made regrettable decisions as a result of a lack of emotional control.

Yet, every one of these traders can talk the game of trading and even make okay money. But they are not making the money they see being made by their teacher and that they could be making. It’s clear that the money is there for the picking. The normal traders, who have been trading for years and have great knowledge of trading, cannot perform consistently when the money counts. What do you think they do to solve this problem of not being able to perform in the heat of the moment? Well, they spend more money on acquiring more knowledge. But they ignore the need for self-knowledge.

NEXT PAGE: Working Hard Is Never Enough to Win in Trading

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These traders described above are hard workers but mindless thinkers, and professional traders depend on this. It is common for a novice trader to spend $10,000-$50,000 on education courses that guarantee them an edge in the market. Add to this number their trading losses. After a number of these indulgences, you would hope that they would figure out that all that glitters is not gold. But it’s rare. Becoming a successful trader is not as simple as those sales people make it out to be. In fact, it is one of the hardest careers imaginable to be profitable in.

It is at this point that you can become your best friend or you can become your worst enemy. The markets do not care what you choose. They do not care if you win or if you lose. You can continue to do the same things over and over again, work harder, buy better systems, indicators, hire a new trading coach and the markets are oblivious to your efforts. You are the only one who really cares about whether you are winning or losing money consistently.

The one thing you can depend on, though, is that your trading account will show you in unambiguous detail whether or not you know how to use your knowledge of trading effectively while risking real capital. Hard work means nothing. Becoming effective in the performance of actionable risk means everything. It simply does not matter what you know about trading, that is the price of admission to the game. Until you can use that knowledge with money on the table, you are not working (no matter how much you labor) effectively in the domain of trading. This is the head game of trading. And it separates the elite from the pack.

The Conditions of Success Are Different for Trading Success Than What You Learned Elsewhere

What most traders do not get is that trading is a head game, once knowledge is developed. And if you have not got your head screwed on right, it does not matter how much knowledge you have. If you cannot use that knowledge effectively to manage uncertain outcomes in the heat of the moment, you are not working—you are gambling—because the house (i.e. professional traders) holds the odds in its favor. And they are expecting your dependence on the deception of the effectiveness of hard work to deliver a paycheck.

The real question is, (after the seductive allure of easy money has cleared from your mind)—Who do I need to become so that I can make a sustainable living from my trading?

Letting go of the illusion of control over outcome. If you have perfectionistic tendencies or have a need to control, you are at an enormous disadvantage competitively with skillful traders. Giving up the notion of not being wrong, of being right, or that you can control outcome is the first perceptual shift that has to occur in a trader’s growth toward sustainable income.

Controlling your performance of execution. “You” are the only thing that you can control in the performance of trading. Trading is one of the few professions where you can do everything right and still be wrong a chunk of the time. Yet, it is this control over execution that is the edge that unites psychology of performance with knowledge of trading. It is the difference maker. Until your performances (not your talk) show this, you will continue to experience the roller coaster of uneven performances.

Control from outside of the self to internal control. Most people have spent a lifetime attempting to control the external world around them. It makes sense in a macro world. Except that it does not work in trading because it is a micro world. To grow, traders learn to turn toward their fears rather than avoid or attack them. They know that trading will find the weak clink in the armor sooner, rather than later. This is the core of self-development. Your demons have much to teach you if you are willing to face them. Stay oblivious to them, and they will devour your capital.

NEXT PAGE: The Missing Puzzle Piece

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This is the missing piece—the head game of trading—where so many traders stay stuck. The markets do not care. You can stay stuck in self-limiting belief patterns for as long as your capital will allow you. Success can stay a mirage, right around the corner, so close, yet so far. You can declare that it is not fair after all your hard work or that the Gods of the market must be crazy. The markets only answer with silence. The only one that cares is you. And you can be your best friend or your worst enemy. The choice is always yours.

Getting Started in Creating a Brave New World

You have never seen or experienced the markets. You have only experienced your brain’s taking sensorial data from your five senses and building a virtual simulation of the markets. You never see “the markets”. You see your beliefs about your capacity to manage uncertainty projected upon the markets. This is your virtual simulation, not reality. Confusing them is dangerous to the health of your trading account. The measure of the effectiveness of your particular virtual simulation of the markets is measured by the success of your trading account, not by what you think or believe. If you wake up, you can become the designer of your perception, and your trading account becomes the yardstick by which you grow as a trader. You develop beliefs so that your virtual simulation of the markets produces far more profits than losses.

This development of a trader's mind does not come through the misguided use of affirmations and visualizations. It comes from the examination and re-construction of the core beliefs by which you manage the probabilities embedded into the potentialities of risk management. To get to the possibility of that mind, you have to take the blinders off that stop you from seeing and acting in the markets more effectively.

Next time you brush off the need for self-development as a trader, step back and really think about what you are doing to yourself and the future you are responsible for creating. Do you want to stay stuck in the normalcy of Groundhog Day, repeating the same mistakes over and over again, but believing that it will be different? Or do you want to chart a new course? Where your “virtual simulation” of the markets guides you into consistent profitable performances.

Your trading account will always tell you the truth whether you want to hear it or not. It is your choice; you can be normal and continue the drama. Or you can choose to become the trader who can command the knowledge of trading when you are in the clutch.